This paper, co-authored with Megan Porzio and Michelle Yingze Song, reports an experiment with participants who trade a risky asset with a “flat” fundamental value that equates expected dividends to the return on a safe asset. Bubbles are pervasive, in contrast with previous studies with flat values induced by a balanced mix of positive and negative dividends. Forecasts trail share prices as they rise and exceed prices as they fall. Subjects are sorted by gender, and bubbles generally start slowly with females, but end up being as large as in all-male markets. This no-difference pattern differs from strong gender effects previously observed in markets with declining fundamental values.

Charles Holt is the A. Willis Robertson Professor of Political Economy at the University of Virginia, where he also teaches in the Batten School of Leadership and Public Policy. Previously, he taught at Minnesota, after finishing graduate work at Carnegie-Mellon, where he studied under Ed Prescott and Morris DeGroot. He is the currently the director of the Experimental Economics Laboratory at Virginia. He develops and programs the web-based VeconLab experiments that are widely used for teaching and research (over 90,000 participant logins per year). His publications include over a hundred articles in academic journals, focused on game theory, auctions, experimental economics, and the teaching of economics. He has written and edited several books on topics in experimental economics, and was a founding co-editor of the journal, Experimental Economics. He has previously served as President of the Economic Science Association, the Southern Economic Association, and the Society of Economic Educators. Much of his research pertains to auction design, e.g. for greenhouse gas allowances, spectrum licenses, auto license plates, and toxic banking assets. Other work includes measures of risk aversion and subjective beliefs, and studies of strategic behavior in games and bargaining, using a mix of theory and experiment.